NYT: Say, ObamaCare doesn’t really lower costs in rural areas

posted at 3:21 pm on October 24, 2013 by Ed Morrissey

Of course it doesn’t, even though that was one of the core promises the administration and Democrats made in pushing ObamaCare on the nation. More than four years after debate began on the massive restructuring of the nation’s health-care market, the New York Times finally notices that the law doesn’t actually address why the costs in rural areas remained so high — the lack of choice and competition:

As technical failures bedevil the rollout of President Obama’s health care law, evidence is emerging that one of the program’s loftiest goals — to encourage competition among insurers in an effort to keep costs low — is falling short for many rural Americans.

While competition is intense in many populous regions, rural areas and small towns have far fewer carriers offering plans in the law’s online exchanges. Those places, many of them poor, are being asked to choose from some of the highest-priced plans in the 34 states where the federal government is running the health insurance marketplaces, a review by The New York Times has found.

Of the roughly 2,500 counties served by the federal exchanges, more than half, or 58 percent, have plans offered by just one or two insurance carriers, according to an analysis by The Times of county-level data provided by the Department of Health and Human Services. In about 530 counties, only a single insurer is participating.

The analysis suggests that the ambitions of the Affordable Care Act to increase competition have unfolded unevenly, at least in the early going, and have not addressed many of the factors that contribute to high prices. Insurance companies are reluctant to enter challenging new markets, experts say, because medical costs are high, dominant insurers are difficult to unseat, and powerful hospital systems resist efforts to lower rates.

Why should this surprise anyone, let alone the New York Times now? There is nothing about ObamaCare that actually increases competition, nor is it the point of the project. ObamaCare is about using the brute force of government intervention to redistribute the assets of risk pools in a politically palatable way. That’s why we have new mandates on covering pre-existing conditions, sterilization, and forcing insurers to cover “children” through the age of 26. All of that guarantees higher costs; those are only obfuscated by government subsidies, although not entirely.

The solution to rural costs for health insurance was one that Republicans proposed repeatedly during the debate as an alternative to government intervention — allowing insurers to sell policies across state lines. Eliminating that prohibition would have at least provided the opportunity for competition and better pricing for rural Americans. That kind of market-based reform applied more broadly would have helped draw down the cost curve in a real way in other areas of the health-care industry as well. Democrats refused to consider it, and this is what we have now — the worst of both worlds.

Don’t expect this to get any better, either, although the NYT quotes the White House urging patience:

The Obama administration, while not disputing the findings, responded to the analysis in a statement that the marketplaces ”allow insurers to compete for customers based on price and quality.” It added that the tax-credit subsidies that will lower monthly payments for many consumers had also ”brought more companies to the market, resulting in increased options for consumers and lower-than-expected premiums.”

It didn’t bring more companies to markets in rural areas, obviously, and it won’t in the future. Insurance companies will have fewer resources in the future to set up shop in places like Wyoming, Montana, the Dakotas, and so on because of the cost pressure on their existing risk pools. In fact, they’re more likely to leave those areas than expand into them, especially if ObamaCare can’t succeed in forcing younger and healthier Americans to pay massive premiums for comprehensive policies they don’t need, with deductibles that practically ensure they’ll never benefit from them.

In short, this isn’t reform. It’s a political stunt, and data like this shows how little reform meant to those who created it.

Blowback

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them only costs that obamacare lowers is the premiums that were paid by single purchasers in the 5 states that had “guarantee issue” prior to Obamacare. except for Massachusetts that had a form of this
rates will rise in the other 45 states.

The solution to rural costs for health insurance was one that Republicans proposed repeatedly during the debate as an alternative to government intervention — allowing insurers to sell policies across state lines.

Ed, you do realize that there’s nothing stopping states from allowing this, right? There’s no federal law that mandates that you can’t buy “out of state” insurance. In fact, at least six states have tried it.

red_herring not one intelligent person is going to open your PDF. if there is something relevant you want to convey, quote it.

Murphy9 on October 24, 2013 at 3:42 PM

How about these quotes:

While it is certainly the case that many consumers and
small businesses lack meaningful choices among insurers
and struggle to find affordable coverage, our findings
suggest that across state lines legislation does not appear
to be the “silver bullet” that proponents are searching for

To date, although all states have long had the
authority to do so, only six have enacted across
state lines legislation

Across state lines proposals have been unsuccessful
at meeting their stated goals.

Across state lines legislation was largely
unsuccessful because of the localized nature of how
health care is delivered. R

Not surprising. I assume that person wasn’t authorized to speak to the media. If I talked to a reporter I would be fired from my job. It’s pretty much that way for every company.

Dr. Frank Enstine on October 24, 2013 at 3:40 PM

Although it does depend on what job you’re in.
As a call center worker answering the calls fed to her by the system, her job is in fact to talk to whoever is on the line when the system forwards a call to her.
We could probably quibble over what she said, how much she said, and how long this went on, but her job actually is to answer calls.

Ed, you do realize that there’s nothing stopping states from allowing this, right? There’s no federal law that mandates that you can’t buy “out of state” insurance. In fact, at least six states have tried it.

red_herring on October 24, 2013 at 3:37 PM

You remember when Arizona tried to enact state law that mirrored federal law concerning illegal immigrants? You remember the word of the day when the feds sued Arizona?

Preemption!

A federal allowing interstate insurance commerce would preempt state law.

Any chance of a class action suit against the government for arrogance and negligence (or maybe, just negligence) for any and all information stolen by hackers from the Obamacare site, since it was rolled out before it was tested and secure?

You remember when Arizona tried to enact state law that mirrored federal law concerning illegal immigrants? You remember the word of the day when the feds sued Arizona?

Preemption!

A federal allowing interstate insurance commerce would preempt state law.

Your name suits you.

NotCoach on October 24, 2013 at 3:51 PM

Of course it would. But there isn’t currently any federal law on the books. At the moment therefore, States are free to allow their citizens to purchase out of state insurance. Only six have chosen to do so.

The sort of federal law Ed is calling for would actually take away state sovereignty. It would force States to abide by other states’ regulations.

Any chance of a class action suit against the government for arrogance and negligence (or maybe, just negligence) for any and all information stolen by hackers from the Obamacare site, since it was rolled out before it was tested and secure?

Fallon on October 24, 2013 at 3:53 PM

Depends on whether or not ObamaCare denies such a legal recourse. Congress always has the authority to prevent civil suits, and cap their awards where they are allowed. I don’t know if any such language exists within this legislation.

Ed, you do realize that there’s nothing stopping states from allowing this, right? There’s no federal law that mandates that you can’t buy “out of state” insurance. In fact, at least six states have tried it.

red_herring on October 24, 2013 at 3:37 PM

You remember when Arizona tried to enact state law that mirrored federal law concerning illegal immigrants? You remember the word of the day when the feds sued Arizona?

Preemption!

A federal allowing interstate insurance commerce would preempt state law.

Your name suits you.

NotCoach on October 24, 2013 at 3:51 PM

In fact Obamacare doesn’t even allow insurance to be sold across COUNTY lines, which is just nuts.

One of the states mentioned in the NY times article as an example of high rates is Wyoming. Wyoming currently allows its citizens to buy out of state insurance. Whoops!

red_herring on October 24, 2013 at 3:57 PM

But ObamaCare doesn’t. Double whammy whoops!!

Prices are going up in Wyoming under ObamaCare. And if Wyoming didn’t allow out of state insurers prior to ObamaCare prices would have been very high. Wyoming’s problem is a small population with a limited resource pool.

“Selling across state lines” simply means that an insurance company is regulated by the state in which is is based, not the states in which it sells insurance.

red_herring on October 24, 2013 at 4:00 PM

Really. Did you graduate from Harvard Law like nonpartisan did?

Selling across state lines means nothing but selling across state lines. Let’s use alcohol as an example. Many alcohol manufacturers sell across state lines. But they all must comply with the liquor laws of the state they are selling in. Yet they still sell across state lines. I don’t get it. That’s nothing like your crystal ball reading of Ed’s words. How can this possibly be?

The tax/fine on a person making $43K who doesn’t want or can’t afford insurance will only equal about $860 (vs. thousands in premiums and deductibles), and $860 will barely cover any actual medical procedure.

Hospitals will still be required by law to provide care regardless of insurance coverage or ability to pay.

Can you explain how Obamacare does anything to change the free rider problem?

One of the states mentioned in the NY times article as an example of high rates is Wyoming. Wyoming currently allows its citizens to buy out of state insurance. Whoops!

red_herring on October 24, 2013 at 3:57 PM

Maybe you should actually read and understand the drivel that your masters at OFA tell you to send out.

WY passed legislation in 2010 that would allow consumers to purchase insurance across state lines once several criteria have been meet.

At this point, they haven’t. So NO consumers in WY do NOT have to opportunity to purchase insurance across state line.

In fact, in none of the 6 states is it possible for consumers to purchase across state lines. Most of the states were in exploratory stages of the process or reaching out to insurance companies to see how/if it could work.

Selling across state lines means nothing but selling across state lines. Let’s use alcohol as an example. Many alcohol manufacturers sell across state lines. But they all must comply with the liquor laws of the state they are selling in. Yet they still sell across state lines. I don’t get it. That’s nothing like your crystal ball reading of Ed’s words. How can this possibly be?

NotCoach on October 24, 2013 at 4:04 PM

I don’t mean to be condescending, but you do realize that every insurance company can currently sell across state lines as you define it, right?

I’d say Obamacare was passed so that people with preexisting conditions and the working poor could get insurance. As you astutely point out, the way its designed creates a free rider problem. The individual mandate doesn’t do a whole lot to fix that.

I’d say Obamacare was passed so that people with preexisting conditions and the working poor could get insurance. As you astutely point out, the way its designed creates a free rider problem. The individual mandate doesn’t do a whole lot to fix that.

red_herring on October 24, 2013 at 4:14 PM

People with pre-existing conditions could always get insurance. Depending on the condiotion they’d have to pay a higher premium. The “working poor” have access to Medicaid and charity. If Medicaid isn’t working let’s get rid of it.

I don’t mean to be condescending, but you do realize that every insurance company can currently sell across state lines as you define it, right?

red_herring on October 24, 2013 at 4:11 PM

No, as a matter of fact, they can not.

An insurer must be licensed in the state they sell to. And that usually means also having a physical presence in the state. Many insurers are licensed in several states, but it is a financial and regulatory hassle to seek a license in every single state. They will therefore prioritize their efforts. They will only make the effort in states they see as potentially lucrative markets. Instead of requiring licensing, require compliance with any state’s laws. And allow state AGs to cross state lines in seeking redress of failure to comply.

I’d say Obamacare was passed so that people with preexisting conditions and the working poor could get insurance. As you astutely point out, the way its designed creates a free rider problem. The individual mandate doesn’t do a whole lot to fix that.

red_herring on October 24, 2013 at 4:14 PM

The individual mandate was designed to solve the free rider problem. But you’re the first leftist I’ve seen yet admit how it will ultimately fail. Kudos to you.

I don’t mean to be condescending, but you do realize that every insurance company can currently sell across state lines as you define it, right?

red_herring on October 24, 2013 at 4:11 PM

You don’t seem to understand that the issue is not whether an insurance company can SELL across state lines, it’s whether states allow citizens of their state to BUY insurance from a company that is not certified to sell insurance within that state. Every state has their own insurance regulatory agency that licenses insurance companies to operate in the state. All the insurance company has to do is get licensed in the state, open an office there, and meet the requirements that state imposes for its own citizens – and you’re selling insurance in that state.
New Jersey, for example, doesn’t allow its citizens to BUY insurance from a company operating another state, but not in NJ, so people go get PO boxes in Pennsylvania in order to show an address in PA so they can buy PA insurance.

An insurer must be licensed in the state they sell to. And that usually means also having a physical presence in the state. Many insurers are licensed in several states, but it is a financial and regulatory hassle to seek a license in every single state. They will therefore prioritize their efforts. They will only make the effort in states they see as potentially lucrative markets. Instead of requiring licensing, require compliance with any state’s laws. And allow state AGs to cross state lines in seeking redress of failure to comply.

NotCoach on October 24, 2013 at 4:19 PM

I agree with everything you just wrote. There is a de facto ban on the interstate sale of insurance. But that’s because states want to control their own markets. If the feds were to come in and get rid of the de facto ban, states would lose their power over the insurance market within their borders. That’s a pretty massive incursion on state power.

You don’t seem to understand that the issue is not whether an insurance company can SELL across state lines, it’s whether states allow citizens of their state to BUY insurance from a company that is not certified to sell insurance within that state. Every state has their own insurance regulatory agency that licenses insurance companies to operate in the state. All the insurance company has to do is get licensed in the state, open an office there, and meet the requirements that state imposes for its own citizens – and you’re selling insurance in that state.

dentarthurdent on October 24, 2013 at 4:21 PM

I understand that. My point is that getting rid of this would require the feds to take away significant state powers.

Then why does your link say states have to enact legislation allowing it?

darwin on October 24, 2013 at 4:17 PM

If you read his definition, he makes the comparison to selling alcohol across states lines. You can do it so long as you comply with the state law in which you’re selling. The same is true of insurance.

Selling across state lines means nothing but selling across state lines. Let’s use alcohol as an example. Many alcohol manufacturers sell across state lines. But they all must comply with the liquor laws of the state they are selling in. Yet they still sell across state lines. I don’t get it. That’s nothing like your crystal ball reading of Ed’s words. How can this possibly be?

I understand that. My point is that getting rid of this would require the feds to take away significant state powers.

red_herring on October 24, 2013 at 4:24 PM

And why do you want that?
It’s no different than any other business license to operate within a particular state.
I don’t want the feds involved in state level insurance any more than I want them controlling local education, or any of a thousand other things.

I personally don’t care if NJ citizens can’t get decent insurance in their own state. If they don’t like what their own government is doing to them, they need to vote out the politicians and make a change.

I’d say Obamacare was passed so that people with preexisting conditions and the working poor could get insurance. As you astutely point out, the way its designed creates a free rider problem. The individual mandate doesn’t do a whole lot to fix that.

red_herring on October 24, 2013 at 4:14 PM

So you want to ignore the statement of the President of the United States, the man the law is actually named after, and make up your reasons why it was passed now?

Fair enough.

So your stated position is that all of our costs are massively increasing in order to maintain the status quo regarding free riders in order to cover 107,000 folks with pre-existing conditions (3/100ths of 1% of the US population)?

I understand that. My point is that getting rid of this would require the feds to take away significant state powers.

red_herring on October 24, 2013 at 4:24 PM

You would only need to remove the licensing requirement. That doesn’t mean insurers wouldn’t have to comply with a state’s laws. What about auto insurance? That currently works like us conservatives would like to see health insurance. Auto insurers still have to comply with the laws of any state they sell in. And believe me, the state I live in, Michigan, has plenty of laws concerning auto insurance regulations.

I don’t want the feds involved in state level insurance any more than I want them controlling local education, or any of a thousand other things.

I personally don’t care if NJ citizens can’t get decent insurance in their own state. If they don’t like what their own government is doing to them, they need to vote out the politicians and make a change.

dentarthurdent on October 24, 2013 at 4:29 PM

Then you shouldn’t support a federal law to allow selling insurance across states lines.

The Congress would have a very strong argument that sales of insurance across state lines is just the sort of thing that is governed by the ICC.

Just to be clear, I’m not defending that position, because I think a great deal of damage has been done by an expansive interpretation of that clause by our vaunted jurists. It is my opinion that the clause is simply to regulate commerce among the states by preventing states from enacting restrictive tariffs and the like against each other, but hey, I don’t get paid the big bucks to make bad law either.

You would only need to remove the licensing requirement. That doesn’t mean insurers wouldn’t have to comply with a state’s laws. What about auto insurance? That currently works like us conservatives would like to see health insurance. Auto insurers still have to comply with the laws of any state they sell in. And believe me, the state I live in, Michigan, has plenty of laws concerning auto insurance regulations.

NotCoach on October 24, 2013 at 4:30 PM

I honestly don’t know the cost down of the licensing requirement vs complying with regulations. If I had to guess, I’d say that complying with state insurance regulations is super expensive, much more so than auto insurance.

Of course it’s more expensive in rural areas. My state announced this summer it would be divided up by the major population centers and then everyone else lumped into one rural area…. with much higher prices. By limiting us to only plans in our individual states and individual geographic regions, they’ve managed to take a crappy system and make it a thousand times worse. By design.

We already knew this was happening…. the small town where my parents live went from 3 full time general practice MD last spring down to 2 part time nurse practitioners…. and this is a town that invested in solid healthcare services 40 years ago and worked hard to attract good healthcare providers to the community with it’s own hospital and out patient clinics – they have a great track record of scholar shipping local graduates for studies in health fields and making sure they had guaranteed jobs.

Early this summer, my aunt went in for an appointment for help diagnosing a severe and persistent abdominal pain. While well meaning, the nurse practitioners lacked the knowledge base to diagnose or treat the problem. Finally, at her wits end, she bit the bullet and made an appointment in a nearby city with a doctor who immediately recognized that she was suffering from an obstructed intestine and was admitted for surgery that afternoon. 48 hours later (other than recovering from the incision) she was 100% her old healthy self.

This whole scenario had zero to do with my aunt’s having health insurance – it was the result of decreased access to health care professionals.

In the meantime, how long until someone notices that these narrower provider options won’t travel well. I routinely drive all over Texas for work – and while I’ve rarely ever had to use it, it was reassuring to know that my BCBS policy was accepted everywhere.

CRAWFORD: Industry analysts, like Jonathan Wu, point out the website lumps people only into two broad categories: 49 or under, and 50 or older. Prices for everyone in the 49 or under group are based on what a 27-year-old would pay. In the 50 or older group, prices are based on what a 50-year-old would pay.

We ran the numbers for a 48-year-old in Charlotte, North Carolina ineligible for subsidies. According to HealthCare.gov, she would pay $231 a month. But the actual plan on BlueCross BlueShield of North Carolina’s website costs $360 – more than a 50 percent increase. The difference: BlueCross BlueShield requests your birthday before providing more accurate estimates.

The numbers for older Americans are even more striking. A 62-year-old in Charlotte, looking for the same basic plan, would get a price estimate on the government website of $394. The actual price is $634.